In the news this week:
Temasek Holdings invests in an Indian biotech firm that is
developing treatments for the Zika virus. Government funds
compete for Indian hard assets. And the Canada Pension Plan
Investment Board and Denmark’s ATP Group announce
their latest results.
Temasek to Finance Zika Vaccine?
As the Zika virus sweeps across South America, international
drugs companies are frantically working on a vaccine. One firm
has already had some success in developing a treatment for the
mosquito-borne virus — not one of the big
multinationals, but a privately-owned Indian biopharmaceutical
firm named Bharat BioTech, which has filed for global patents
for two Zika vaccines.
The news of Bharat’s breakthrough has generated
much excitement amongst the international media, but Bharat has
warned it may take ten years to bring the drug to market. The
company will need patient long-term capital to support its work
over the next decade — and Singapore’s
$194 billion state investor Temasek Holdings is among those willing to
Temasek, which has long been a prominent investor in emerging drugs
companies, is reportedly competing with private-equity firms to
acquire a $200 million stake in Bharat after three of its
existing investors — Indian venture capital firms
ICICI Ventures and Subhkam Ventures, and the International
Finance Corp., a unit of the World Bank — decided to
Indian Hard Assets
Temasek is also eyeing a real estate investment in India.
Gurgaon-based real estate developer DLF is selling a 40 percent
stake in DLF Cyber City Developers, its commercial leasing
unit, and Temasek is reportedly in discussions to buy the
But Temasek is not alone: It will face competition from several
other government investors, including its national peer, GIC, the Abu Dhabi Investment Authority, the Canada Pension Plan Investment Board and
the Qatar Investment Authority. These funds
are reportedly willing to pay as much as 135 billion rupees ($2
billion) for the stake.
ADIA, meanwhile, is in talks over an investment in the Indian
road network. According to reports in the local press, ADIA
is in advanced negotiations with the National Highways
Authority of India, a government body, to acquire a portfolio
of 50 toll-operated highways across the country for
approximately INR 350 billion.
Other funds are looking at more lucrative distressed assets
in the Indian infrastructure sector. According to reports in
the local press, Caisse de dépôt et placement du
Québec, the Kuwait Investment Authority and the State General Reserve Fund of the Sultanate of
Oman have teamed up with two Mumbai-based companies
— private equity firm ICICI Venture and utility
operator Tata Power — to form a joint venture that
will buy distressed power-generation assets across India. The
three government investors will reportedly provide a total of
$650 million to the venture, with ICICI and Tata contributing
an additional $200 million.
Sovereign wealth funds’ evident confidence in
the Indian economy appears well-founded. According to figures
disclosed by the Indian government on Monday,
India’s GDP growth topped 7.2 percent in 2015
— surpassing even China’s 6.9 percent
ATP and CPPIB Announce Strong Results
Two government funds announced impressive performance figures
this week. CPPIB disclosed a return on investment of 4.6
percent during the three months to December 31, 2015,
bringing the fund’s overall assets to C$282.6
billion ($204 billion). In a statement, CPPIB's CEO Mark
Wiseman attributed the results to the strong performance of
the fund's global equities portfolio.
Denmark’s ATP Group
announced even better results.
The fund returned a stellar 17.2 percent in the calendar year
2015. Overall, ATP grew by 16.5 billion krone ($2.4 billion),
largely thanks to solid performance of the fund's equity
ATP also revealed that it has adopted a new approach to
portfolio construction. Since 2006, the fund has allocated
risk using asset classes such as equities, credit and
commodities, but from now on ATP will use what it calls risk
factors, such as interest rates and inflation, to construct
its portfolio, following a model pioneered by CPPIB and other
Canadian pension funds.